Frequently Asked Questions (FAQ)

This FAQ is not exhaustive in regards to mining Ethereum, but it does seek to provide short and direct explanations of some of the more common questions newcomers to mining might have. A good resource for further questions is the Ether Mining Subreddit (https://www.reddit.com/r/EtherMining/)

What is Ethereum?

Ethereum is a proof-of-work, cryptocurrency based on the Bitcoin code base. It differs from Bitcoin by allowing generic programs (aka smart contracts) to be written and run on the Ethereum blockchain, whereas Bitcoin was designed to be primarily used for financial transactions. For more detailed information please see the Ethereum wikipedia page or visit the official website.

What does it mean to mine Ether?

As Ethereum transactions are produced, they must be validated before they can be added to the blockchain. Computers running client software that is capable of validating blocks of these transactions are called miners. To incentivize the validation of blocks of transactions, the Ethereum blockchain is designed to reward miners periodically with a certain amount of the native token (i.e. Ether, in the case of Ethereum) for the blockchain.

Is mining still profitable?

Yes, currently mining Ethereum with GPUs is still profitable. How profitable mining is, changes over time based on how many miners are on the network and the difficulty setting of the network. You can calculate your monthly profit by using a mining calculator. Overtime it is expected that mining will become less profitable and after the transition to the proof-of-stake implementation, mining will no longer be possible.

Why should I mine as part of a pool?

You could choose to mine solo (i.e. only with machines you control); however, you would need to operate a lot of machines in order to have enough hashing power to produce valid blocks often enough to be able to receive regular payouts. This is due to the fact that pools produce orders of magnitude more hashing power than solo miners with a rig or two are capable of producing.

By operating as part of a large pool you will receive regular payouts from the pool proportional to the hashing power you contribute. For a single 6 GPU rig it is the difference between receiving payouts every few days versus going months without receiving a payout. Pools typically charge fees of 1% of the reward in order to participate.